U.S. economic growth slowed sharply in the first quarter of 2024 as inflation-weary consumers tightened their belts and spent less, government reports said Thursday.
Data released by the US Bureau of Economic Analysis showed that gross domestic product grew at an annual rate of 1.6% in the first three months of this year, after a 3.4% increase in the fourth quarter of 2023.
The government’s initial estimate was lower than expected, with economists polled by FactSet forecasting a 2.2% GDP growth in the last quarter.
“Growth momentum is clearly cooling sharply compared to the strong growth seen in the second half of last year, and while American exceptionalism remains intact, we are starting to see cracks in the hard data.”
The data showed that personal spending rose 2.5% and the core inflation gauge rose 3.7% in the first quarter of a year.
The information was released ahead of next week’s Federal Reserve policy meeting. With central banks expected to keep interest rates at their current two-decade high, the latest data could delay future rate cuts.
“It’s an interesting mix of data signals, and the end result is higher U.S. yields, lower stocks and a stronger dollar,” said Kyle Chapman, currency market analyst at the Bollinger Group.
Stocks fell sharply Thursday morning after a report showed the economy slowing amid stubborn inflation, with the benchmark index down more than 1%.
Kate Gibson
Kate Gibson is a reporter for CBS MoneyWatch in New York.
